Can TikTok's owner afford to lose its killer app?
US lawmakers could vote this weekend on a second bill in as many months that corners TikTok's Chinese owner ByteDance with a stark choice sell its US business or be banned.
Fears that data about millions of Americans could land in China's hands have driven Congressional efforts to split TikTok from the Beijing-based company.
TikTok has said ByteDance "is not an agent of China or any other country". ByteDance insists it's not a Chinese firm, pointing to the global investment firms that own 60% of it. The app's extraordinary success in the US has made it another flashpoint between Washington and Beijing.
Some 170 million Americans spend at least an hour of their day on TikTok. That includes about 6 in 10 teenagers, according to Pew Research Centre. More than 40% of US users say it's their regular source of news.
A ban on TikTok could be challenged as a violation of free speech. It's also difficult to police and unpalatable in an election year. While forcing ByteDance to sell the app is seemingly simpler, that option also faces obstacles.
But who will buy TikTok's US operations, which, by some estimates, could fetch up to $100bn?
The biggest question of all: Would ByteDance sell its most successful app?
Founded in 2012 by Chinese entrepreneurs, ByteDance first hit the jackpot with short video app Douyin in China. A year later, it launched TikTok, an international version. TikTok was banned in China but gained a billion
users in five years.
It is now run by a limited liability company based in Los Angeles and Singapore but is essentially owned by ByteDance. While its founders own only 20% of ByteDance, it's the controlling stake in the company. About 60% is owned by institutional investors, including major US investment firms such as General Atlantic, Susquehanna and Sequoia Capital. The remaining 20% is owned by employees around the world. Three of its five board members are American.
ByteDance has nine months to decide TikTok's fate - if the chances for a sale look promising, President Joe Biden can extend the deadline by another 90 days. He has said he would sign it into law when it reaches his desk.
Valuing TikTok for sale is tricky. As a privately-owned company, it does not release financial details. Reports estimate its US revenue stood between $16bn to $20bn in 2023, making up as much as 16% of ByteDance's revenue.
Arm-twisting ByteDance will not work, analysts say. "It will just shut down [in the US] rather than make a few billion dollars," said Ling Vey-Sern, an adviser for
Asia technology at Swiss private bank Union Bancaire Privée. A ban would allow it to return "when circumstances change, while a sale means a more definite outcome".
The US wouldn't be the first to block TikTok - India banned the app in 2020, citing security concerns. But TikTok survived that ban because the Indian market, which was then about as big as the US market is now, wasn't as profitable, said Jayanth N Kolla, founder of technology advisory firm Convergence Catalyst.
The US is now TikTok's largest market, accounting for about 17% of its total users, and its most lucrative. "If TikTok were to lose its US operations, it is not just losing the user base, but a large portion of its revenue pie. That's an immense loss," Mr Kolla said.